Explore Your Options by Jay Kaeppel
MAKING ADJUSTMENTS TO AN OPTION POSITION
I have a decent open profit on a long call position. I think the upward price trend will ultimately continue but I’m concerned that there will be a pullback in the meantime and that a lot of my profit will evaporate. I know I could sell my calls and try to buy them back later, but I’m not sure I will pull the trigger to get back in if I get out now. Is there an alternative?
Yes, there are lots of alternatives. As I wrote about last month in this column, options offer investors and traders unique opportunities to improve the reward/risk ratio for a given trade via an “adjustment” to an option position ...